The popularity of the boutique hotel concept positioned the segment ahead of the curve in 2019, with double-digit supply growth, according to research from The Highland Group.
REPORT FROM THE U.S.—A new report shows the proven and well-performing boutique hotel segment should provide optimal rebound opportunities for those in a financial position to open a new hotel in two to three years’ time.
According to The Boutique Hotel Report 2020 from The Highland Group, 2019 boutique hotel supply continued to be the fastest-growing segment in the U.S. for the third year. Supply growth for all U.S. hotels was clipping along at a steady 2% in 2019 compared to 2018, as it had for the past few years. The upscale class and extended-stay hotels, historically the fastest-growing segments in the U.S., grew at a rate of 3.7% and 6.9%, respectively. Becoming increasingly popular, independent boutique, lifestyle hotels and soft-brand collections, known as boutique hotels, collectively increased at a rate of 10.6% from 2018 to 2019.
Strong growth momentum and increased interest in developing this segment doesn’t come as a surprise. The boutique hotel concept profits from a focus on a thoughtfully curated local approach, exceptional design and unique amenities attracting a rate and occupancy premium over traditional hotels. Consequently, these hotels generated more annual room revenue per available room than most traditional concepts overall in 2019.
Boutique lodging options totaled at 160,000 rooms in the Top 25 MSAs in 2019. However, 15 of the MSAs show distribution of this segment at less than 100% compared to the total number of hotels in its market. This represents opportunity to develop boutique hotel product in premium markets including Denver, Philadelphia, Atlanta and Houston.
What the hotel landscape will look like after the COVID-19 pandemic is speculative. It is certain, however, that along with demand for higher quality and evident cleanliness, there will also be a desire for normal life to resume along with the need for authentic human connection and an array of interesting places of which to explore. The inherent nature of a boutique hotel is to focus on local connectivity and a sense of place to enhance the travel experience. As hospitality will assuredly be an essential part of our country’s renewal, so will the need for interesting travel.
Kim Bardoul is partner with The Highland Group and author of the annual Boutique Hotel Report. Her experience includes feasibility studies and market analysis for all types of proposed and existing hotels, due diligence for acquisitions, impact studies for several major franchise companies and financial analysis. She specializes in the boutique hotel product.
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